Investing for Beginners .EU, investing It's not your salary that makes you rich, it's your spending habits.
Charles A. Jaffe

Investing In Stocks Of Employer: Should Your or Not?

2012 May 15

Many employees today are encouraged to buy in in employer stocks. Usually they are offered chance to invest and purchase on stocks of employers with the promise of great benefits in the long run. Before you buy in, here’s what you have to know about investing in stocks of employer.


The Benefits

There are actually distinct advantages when you invest in employers’ stock; among the many benefits of investing in stocks of employers are as follows:


1. Potential of higher returns. You get higher rewards when the price of your employer’s stock increases. You can also purchase discounted shares and receive increased overall amount of stock ownership.


2. More company knowledge. Since you are working with the same company where you invest your money, you have more edge than other investors you are working it. You have more knowledge on how the company works, you monitor its potential growth, and you see its down times. You know when to pull out and when to invest more in your employer stocks.


The Drawbacks

1. Low diversification. Usuall,y if you allocate a large portion of your money in your employer’s stock and your company did not do well in the market, that would also mean great losses on your part. Since there is lack of diversification your portfolio would of course get affected.


2. High risk. If you own a large portion in your company’s stock and the company does well in the market, that means you get bigger returns. But large potion in investing in employer stocks may also pose high risks if the economy contracts and your company’s stocks got affected. If the company experienced serious decline in their stocks, it would also means serious decline in your shares. Unfortunately, if the market came out to be not favorable with your employers stock then it may create impact too in your retirement.


There are actually many reasons why you should or should not start investing in your employer’s stocks: either you receive big returns or you gain great losses too. It is always about balancing. You must know how much is too much when it comes to investing. If you know when to balance and when to leverage your shares, then investing in company’s stocks becomes a good investment.



Read next article: How Stocks Are Reacting to the News?

Security Code:
(Use only capital letters and numbers. If you can not see the code, click on the image.)

You are solely responsible for all content you post to the site. reserves the right to edit or delete any and all reader comments.

Investing in precious metals: Is it a good idea?Investment History 101Is investment risk high today? Are Derivative Investments Necessary For All Investors?Investing In Stocks Of Employer: Should Your or Not?How Stocks Are Reacting to the News?Are Rich People Investing in Real Estate?Investment Styles of Most Famous InvestorsPractice Is the Only Way to Investment ProHow to Invest if Don’t Know Anything about InvestmentWhen Is The Best Age For Beginning of Investing?Economy and Stock MarketRight Time to Stop InvestingSpending and Investing Balance ExtremesInvestment in Your LifeClassical and Untraditional InvestmentsIs Forex Trading Investing?How to Invest during a Recession?Investing In Stocks Of EmployerThe Best Investments for BeginnersTime Spent for InvestingInvesting in Dividend StocksInvestment Takes TimeBeing Rich is a Lifestyle like InvestingInvesting in Stocks is More ProfitableForestry InvestmentsImprove your Investment Results Together with Investment SkillsAll About Investing

Last searches: NPV , peg , penny stocks , valuation , investing in stocks , value stocks , Growth Funds , load , earnings per share , value , investing , investment , beginners , stocks